types of credit. closed end or installment credit loans, merchandise and services are paid for this...

Types of Credit

Closed End or Installment Credit

Loans, merchandise and services are paid for this way. Fixed amount of $$, fixed payments, interest, fixed period of time.

Orthodontia, medical services

Furniture, appliances, electronics

Loans: autos, houses, school, personal, etc.

Secured vs. Unsecured Loans Secured (collateral such as auto, house, etc.)

Unsecured (no collateral)

Revolving Credit

Many items can be bought using this plan as long as you don’t go over your limit and you make regular payments.

May be able to carry a balance, however, interest will be charged.

Charge card (30 day account)

The entire account balance must be paid in full when billed.

i.e. American Express

Credit Card

Retail cards (Target, Nordstrom, REI, GAP, etc.)

Travel/Entertainment (gas, Diner’s Club)

Bank Credit Card General Purpose cards accepted multiple places and issued through a financial institution (VISA, MasterCard).

Affinity CardsA financial institution plus non-financial group

join together to offer a card. Schools, sporting teams, airlines, non-profits,

Co-Branded Cards

Financial institution plus a retail company.

Stored Value CardsA type of electronic bank debit card. Stored-value cards have a specific dollar value

programmed into them. Banks provide these cards as a service for

customers who cannot open checking or other deposit accounts.

In total, American consumers owe:

$11.62 trillion in debt An increase of 3.4% from last year $880.3 billion in credit card debt $8.05 trillion in mortgages $1,122.7 billion in student loans

An increase of 10.5% from last year

Credit Card Debt

Credit card debt is the third largest source of household indebtedness. Only the mortgage and student loan debt markets are larger.

46.7 % of households had a credit card balance on December 30, 2012

Is lower credit card debt good for the economy?

Credit card debt is currently holding fairly steady – but whether or not that’s a good thing is up for debate.

Turn to your partner and discuss – what are the pros and cons of this?